What is a Blockchain Transaction?
What are the Benefits of Blockchain in Real Estate?
Some Blockchain Real Estate Companies To Keep An Eye On
Real estate has always been an industry that sees transactions of all types take place. These could range from massive commercial real estate acquisitions to simple arms-length residential property transactions. Regardless of the scope, real estate typically follows a set of brick and mortar rules to ensure the transaction goes through as intended. However, technological advancements of the 21st century have begun to change the status quo. Living in the digital age, technologies such as blockchain have the ability to transform real estate transactions for the better.
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What Is A Blockchain Transaction?
The word “blockchain” is a popular buzzword that goes over many people’s heads. The most notable blockchain was developed in 2008 and launched “Bitcoin”, a popular cryptocurrency used to facilitate Peer-To-Peer (P2P) transactions.
So What is a Blockchain?
Blockchain transactions are digital transactions that are logged on a public ledger, known as a “blockchain.” Within each public ledger, every transaction comprises a “block” of information and each subsequent transaction is “chained” to the one that came before it. The blockchain has a “decentralized” nature meaning it is distributed across a network of various computers and no central authority has ownership of the blockchain ledger. Every blockchain transaction is verified by its network of computers and this ensures security by preventing outside interference. These types of transactions are efficient and can be completed within minutes. A blockchain ledger has full transparency so anyone can view the status of a transaction at any given time. Transparency, security, and speed are all variables to consider when looking at mainstream applications for blockchain in real estate.
What Are The Benefits Of Blockchain In Real Estate?
In his annual letter to shareholders, Jamie Dimon, the chairman and CEO of JPMorgan Chase, stated “decentralized finance and blockchain are real, new technologies that can be deployed in both public and private fashion, permissioned or not.”
It has become clear that blockchain technology is beginning to see more widespread acceptance. It is only a matter of time before this technology is harnessed by the real estate industry. This comes from a blockchain’s ability to record and transfer ownership of assets in a secure, decentralized manner. This ability of blockchain has the potential to transform the real estate industry on a massive scale. Here are the top four benefits of blockchain in real estate:
Benefits of Blockchain
- Automation of Timely Tasks: Firstly, a benefit of blockchain in real estate is increased transaction speed. The implementation of blockchain within property purchases and sales could automate timely tasks such as title work and escrow disbursements. In simpler terms, you could only have to wait a few minutes for a title search, instead of having to wait days or even weeks.
- Increased Security When Recording Property Ownership: The second advantage of blockchain in real estate is increased security when recording property ownership. The traditional way of recording property ownership with paper deeds poses the risks of forgery and errors. Blockchain in real estate can easily prevent this from happening by creating a way to store this information free from any outside manipulation.
- Increased Liquidity: Investopedia lists real estate as an “inherently illiquid asset,” meaning owners of this type of asset cannot sell fast because of low trading activity. Owners of tokenized assets that are on a blockchain have the ability to instantly sell their assets to buyers of their choice. Blockchain in real estate has the ability to provide this same type of liquidity. If property ownership was recorded on a blockchain, homeowners could easily liquidate their ownership the same way stocks or ETFs are sold.
- Fractional Real Estate Investments: A high barrier to entry is a primary reason many do not look at real estate as a good asset to invest in as a beginner. But what if the novice investor could get in on commercial real estate deals worth millions? Blockchain in real estate opens up this realm of opportunity. Tokenized assets, such as a Bitcoin, have the ability to be purchased at the fractional level, meaning you can invest in Bitcoin with as little as $1. If real estate was tokenized, this logic could easily be applied to real estate assets with recorded ownership on the blockchain.
What Are Some Blockchain Real Estate Companies To Keep An Eye On?
After hearing about the various benefits blockchain in real estate provides, you are probably wondering if any real estate companies have begun to capitalize on this technology. Here is a list of a few real estate companies that are currently using blockchain in real estate:
- SafeWire: SafeWire is a company that is utilizing a blockchain network to secure real estate transactions and prevent brokerages and title agencies from being susceptible to wire fraud.
- SolidBlock: SolidBlock is a global leader in the tokenization as a service (TaaS) within the technology industry and aims to utilize blockchain to allow real-world assets, such as properties, to be tokenized.
- Propy: Propy’s goal is to utilize blockchain, cryptocurrencies, and non-fungible tokens (NFTs) to shorten the time of real estate transactions for all those involved. To date, they have processed over $4 billion in transactions for real estate brokerages.
- RealBlocks: RealBlocks enables real estate investors to make fractional investments in properties. RealBlocks uses blockchain tokenization to increase the liquidity of real estate investments and reduce fees associated with transactions.
Additionally, for more information about companies using property tech to do business click here!
Bottom Line
“Blockchain technology isn’t just a more efficient way to settle securities. It will fundamentally change market structures, and maybe even the architecture of the Internet itself” says Abigail Johnson, chair and CEO of Fidelity Investments. Increased widespread adoption of blockchain in real estate and finance foreshadows a future where blockchain transactions are the norm. Also, the security and speed awarded by implementing blockchain in real estate are far too valuable to ignore. There is no better time to take advantage of the digital age we live in. Through it, we can transform real estate with blockchain technology.
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